HONG KONG is anxious to start discussions with China on arrangements for the civil service after 1997, Acting Governor Sir David Ford said yesterday. But he declined to say if the present row over the new policy allowing overseas contract officers to switch to local terms would be discussed in the coming Joint Liaison Group meeting despite the Chinese side's wish to do so. Sir David maintained the new policy was only an interim measure and did not have any implications after the changeover. ''What we really like to discuss in the Joint Liaison Group are the permanent, long-term arrangements for permanent residence in Hong Kong,'' he said. ''We need to have a clear understanding with the Chinese side as to who will be a permanent resident after 1997, how that will be set about, and also how we can apply that to the civil service so that we can move towards a situation in which we have common terms of service.'' He urged local officers to stay cool and rational. ''I don't think taking any form of dramatic action will help carry us further forward,'' he said. ''Sometimes in government, we have to make difficult decisions that people don't like . . . we should continue to talk, and try to resolve our problems amicably.'' Meanwhile, legislators have asked the Local Crown Counsel Association to clarify whether the emphasis on bilingualism in new proposals to block the policy would have the danger of expelling top civil servants who have sound technical knowledge but lack language skills. The proposals, in the form of two versions of a private member's bill, seek to make proficiency in oral and written Chinese, or residency in Hong Kong for more than 20 years, a condition when expatriate staff renew their contracts. Doubts were also raised on how to give the Government the necessary flexibility to recruit overseas officers to posts that local candidates were not up to. Legislators asked if it would be more appropriate to limit the language requirement to posts where an officer's lack of bilingual ability would affect his capacity to discharge his duties. They also questioned whether the residency requirements were too harsh compared to those on permanent residency in the Basic Law. It was unclear if the 20-year requirement would be unfairly discriminatory against people who had been here for less than 20 years, or go against the International Covenant on Civil and Political Rights which says every citizen should have equal access to public service. The bill might also have financial implications, as it could force the administration to enter into a contract which would be more costly.